He Lost the Title to His Home Over a Small Property Tax Debt. Years Later, He's Finally Getting It Back.
A local government gave ownership of Kevin Fair's Nebraska house—and all of its value—to a private investor, in a practice known as home equity theft.
A Nebraska man whose house title was seized over a modest property tax debt has finally gotten it back, ending a yearslong legal battle that almost saw him lose his home and all of its value in excess of what he owed the government.
In 2014, Kevin Fair was unable to pay his $588 property tax bill after quitting his job to care for his dying wife, Terry, who had been diagnosed with a debilitating case of multiple sclerosis. The next year, the Scotts Bluff County government quietly sold that debt to a private investor, Continental Resources, which continued to satisfy the Fairs' property taxes—until 2018, when the company sent the couple a bill for $5,268.
The family would have to pay that total—their tax debt, along with interest and fees—within 90 days, or lose their house. They would also lose all of their equity, even though their home was worth about $55,000 more than what they owed.
That was business as usual in Nebraska, which was one of many states engaging in legalized home equity theft. "People are shocked about how the law actually operates," Jennifer Gaughan, chief of legal strategy at Legal Aid of Nebraska, told me in 2023. The law was indeed shocking: Local governments were permitted to sell tax debts to investors, without sending correspondence to the debtors. Three years later, as in the Fairs' case, the investor would mail the property owner the new bill, which, of course, had grown substantially, with 14 percent interest and other fees. If the owner couldn't pay within 90 days, then the county treasurer would give the title of the house to the investor, who would then take the home, sell it—and keep the change.
"It's usually elderly people…people who own their homes outright who don't have a mortgage, and there's usually some kind of intervening situation," said Gaughan. "It's not just poverty. It's illness, or something happens in their lives….And then they don't have notice of it. And then [the home] is being taken."
The Fairs sued, arguing that losing the equity in their house in excess of what they owed violated the 5th Amendment's Takings Clause, which promises that the government cannot take private property "without just compensation." The pair lost multiple times, including at the Nebraska Supreme Court.
The U.S. Supreme Court considered the issue in 2023. The plaintiff in that case, an elderly woman named Geraldine Tyler, accrued a $2,300 property tax debt on her condo in Hennepin County, Minnesota, after some neighborhood incidents, including a nearby shooting, prompted her to move to a retirement community. Unable to finance both her rent and her debt—the total bill came to $15,000 with penalties, interest, and fees—the local government seized her condo, sold it for $40,000, and kept the $25,000 profit. The U.S. Court of Appeals for the 8th Circuit ruled that was fine.
The high court's justices unanimously disagreed. "A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed," Chief Justice John Roberts wrote. "The taxpayer must render unto Caesar what is Caesar's, but no more." Tyler was 94 years old when the decision came down.
With that ruling in mind, Nebraska's top court reconsidered its previous decision and ruled that Fair would not have to sacrifice the additional equity in excess of his debt. Whether or not he would be able to retain his title, however, remained unclear, until late last month when he came to an amicable agreement with Continental Resources.
"Kevin was so happy and relieved to be able to recover [the] title to his home," says Christina Martin, a senior attorney at the Pacific Legal Foundation who represented him before the Supreme Court. "And he was extremely grateful and moved by the support from the community, which allows him to save his home for years to come." A GoFundMe set up last week has raised money that will help him satisfy his outstanding debt and apply for Nebraska's homestead exemption for property taxes.
Despite the U.S. Supreme Court's decision and Fair's favorable ruling in Nebraska, some states are still trying to find creative ways to get around the letter of the law. "Illinois and DC are the most blatant continuing offenders," says Martin. Both sell tax liens to private investors, not unlike what happened to Fair. "And five states theoretically ended home equity theft, but gave owners such a short time to claim their surplus proceeds that most will fail to recover their own money," she adds. Chelsea Koetter, a Michigan single mom, owed about $3,800 on her 2018 property taxes. So the government seized her home in 2021, sold it, and kept the $102,636 profit, despite a 2020 Michigan Supreme Court decision that had ruled the practice unconstitutional.
That is a feature, not a bug, thanks to a convoluted debt collection statute Michigan lawmakers passed in the wake of that ruling." Following foreclosure, and before any property is sold or the amount of surplus, if any, is known, owners must properly serve a notarized and completed claim form with the foreclosing government unit within 92 days," reads a lawsuit filed by Koetter to the Michigan Supreme Court. "Approximately a year after foreclosure, and many months after the sale of their properties, owners must file a separate motion in the foreclosure action that took their homes, seeking distribution of any surplus proceeds." If you get lost in that labyrinthine process and miss a deadline—as Koetter did by eight days—the government claims your surplus equity, and you're out of luck.
Fair thankfully shouldn't have to worry about that anymore, his nightmare ordeal finally coming to a close over six years after it began. It's a bittersweet ending, as he will enjoy that security without his wife, Terry, who died during the protracted litigation.
